by Yousef Al-Helou and Jabeen Bhatti, Special for USA TODAY

by Yousef Al-Helou and Jabeen Bhatti, Special for USA TODAY

GAZA CITY - At least 65 Palestinians and 13 Israeli soldiers were killed Sunday in a major battle in a crowded Gaza City neighborhood on what has been the single bloodiest day of the nearly 2-week-old conflict, Israeli and Gazan officials confirmed.

United Nations chief Ban Ki-moon called Israel's latest incursion "atrocious," and said it must do far more to protect civilians. The U.N. Security Council was in an emergency session Sunday night at the request of Jordan on the situation in Gaza.

Hamas' military wing claimed late Sunday that it captured and was holding hostage an Israeli soldier. Israel denied it.

In Washington, President Obama spoke with Israeli Prime Minister Benjamin Netanyahu by phone Sunday and said Secretary of State John Kerry will travel to Cairo to press for a cease-fire.

Obama "raised serious concern about the growing number of casualties, including increasing Palestinian civilian deaths in Gaza and the loss of Israeli soldiers,'' the White House said in a statement.

In Shijaiyah, a neighborhood of Gaza City, Israel continued to demolish shafts and tunnels in expanded operations that began early Sunday morning.

Hundreds were wounded and thousands forced to flee Shijaiyah as dozens of homes were damaged or destroyed by the fighting, which included heavy Israeli tank fire. The battle was the deadliest so far since Israel started its ground offensive late Thursday night.

Residents of the area described chaos as thousands tried to flee the area.

"What happened in Shijaiyah quarter was madness," said Majed Reda, 48, from the district. "Oh God, me and my family cannot believe that we are still alive due to the heavy random tank shelling that lasted for over 12 hours â?¦ it's a horrific massacre â?¦ shells just rained down."

Around the district was evidence of destruction in the rubble and smoke. Lt. Col. Peter Lerner, an Israeli military spokesman, said Hamas militants put up a "huge" level of resistance in the neighborhood, using anti-tank missiles, rocket-propelled grenades and automatic weapons fired from houses and buildings. The Israeli military said 8% of the more than 1,700 rockets fired from Gaza since July 8 were from the neighborhood, a claim unable to be independently verified.

Two of the 13 Israeli soldiers killed Sunday were dual U.S.-Israel nationals, the Times of Israel reported.

One of them was identified as Sean Carmeli of South Padre Island, Texas, Chabad.org reported.

Max Steinberg, a Los Angeles native and volunteer in the Israel Defense Forces, also was among the soldiers killed, JewishJournal.com reported. Steinberg, from the Woodland Hills section of the San Fernando Valley, was a sniper in Golani and joined Israeli forces in December 2012, it said.

The deaths bring the total number of Israeli military casualties to 18. Two civilians have also been killed by attacks in Israel while at least 432 Palestinians have been killed and another 3,000 wounded since the conflict began nearly two weeks ago, according to Gaza Health Ministry officials.

In this latest offensive, Lerner said, 10 tunnel-access shafts had been found in the area so far. Israel says the tunnels are used by Hamas to carry out attacks unlike tunnels on the border with Egypt - now closed - which Gazans use to bring in essential supplies such as food and fuel.

Kerry told CNN that Israel is justified in taking action to protect itself from attacks launched from Gaza but added that the civilian impact of the conflict is unsettling.

"Nobody, no human being can be comfortable with children being killed, but we're not comfortable with Israeli soldiers being killed either," he said Sunday.

Netanyahu, also speaking on CNN, said the military is only targeting militants in its campaign.

"All civilian casualties are unintended by us, but intended by Hamas. They want to pile up as many civilian dead as they can â?¦ it's gruesome," Netanyahu said. "They use telegenically dead Palestinians for their cause."

But witnesses in Gaza disputed that, saying emergency vehicles were unable to reach the wounded.

"Even ambulances came under fire and were targeted by Israeli tanks shelling," said Samer Hayyah, 38, of east Gaza. "Many members of my family were injured or killed while others are still under the rubble."

"My home and many of my neighbors' homes were destroyed in the shelling," he added. "It was very sad and painful to see people leaving their homes carrying whatever they could."

The situation in Gaza is growing worse - 70% of the territory was without power Sunday. Residents say they want peace.

"Daily power cuts worsen the already dire situation," said Nafiz Hamed, 30, of Gaza City. "Ultimately there will be a cease-fire (and as part of that), we want the Egyptian-controlled Rafah crossing to open permanently, so that all goods can come in. We want to build our future and (fulfill) our dreams."

An Egyptian-brokered cease-fire was rejected by Hamas last week after the group said it was not consulted over the truce. Egypt's new government is hostile to the Muslim Brotherhood of its last president Mohammed Morsi, who was ousted last year, and by extension to its counterpart in Gaza, Hamas said.

Hamas also said any cease-fire agreement must include a lifting of the blockade by Israel and the opening of the borders with Egypt.

"The Egyptian leadership should stand by us (but) how can they be honest brokers for a cease-fire when they close the Rafah crossing?" Hamed asked.

Shortages and frequent shelling have taken their toll on locals. At the same time, residents add any truce must be meaningful.

"Of course we want truce, we want to live in peace, not violence but you tell me how is that possible while we are under Israeli-Egyptian siege," said Yusra Mohammad, 26, of Gaza City. "Israel must know that we will not accept the policy of collective punishment."